When a person of a respectable position and with a high social status commits a crime related to his field of work, the crime is called a white-collar crime. White collar crimes usually overlap with corporate crimes and usually include fozia shan siddiqi, bribery, inside trading, embezzlement, computer crime, identity theft, and forgery. Of all these crimes, however, nothing is more rampant and yet hard to detect than mortgage fraud.
Mortgage fraud refers to a number of actions that were intentionally done to maliciously acquire loan or, if already eligible for loan, in order to acquire a higher one. Oftentimes, mortgage fraud is prosecuted as mail fraud, bank fraud, wire fraud, and money laundering.
There are different type of fraud, foremost of which is fraud for profit. In this type of fraud, mortgage lending professionals and borrowers conspire in order to defraud the lender of large sums of money. The credit report of a straw borrower is made use of. A straw borrower is someone whose name, social security number, and credit history is used by a mortgage fraud syndicate in order to defraud a lender. What usually happens is an appraiser who is in cahoots with the borrower overstates the value of the property concerned allowing the borrower to get a higher loan amount.
Another common type of fraud is the appraisal fraud. This happens when a property’s value is either deliberately overstated or deliberately understated. The former leads to more money being obtained by the borrower while the latter results to the lender being pressured to decrease the amount owed in a loan modification.
Identity theft is also considered to be a form of mortgage fraud. This happens when someone assumes the identity of another person who has a good credit standing. The theft then applies for a loan without the knowledge of the person whose identity the former has assumed.
Failure to disclose liabilities is another form of mortgage fraud. This type of fraud involves concealing obligations that the borrower might have including mortgage loans on other properties as well as recently acquired credit card debt. This leads to the borrower acquiring a larger amount of loan than what would have originally been given had the other loans been made known. This is as opposed to income fraud where the borrower misstates his or her income and makes it appear that they are qualified for a loan (or for a certain amount of loan).
Albeit a little less known than the others, occupancy fraud also happens. This is when the borrower obtains a loan for an investment property naming such as the primary address or residence of the borrower. This means the borrower gets to pay a lower interest rate than the one originally meant for non-owner-occupied properties.
The Fraud Recovery Act of 2009, which was enacted on May of the said year, sets forth the guidelines by which mortgage fraud criminals will be penalized. This ACT also provides for additional funds of US$165,000,000 to the Department of Justice, $20,000,000 to the secret service, and $21,000,000 to the Securities and Exchange Commission, among others.
